Create Chart of Accounts, Ledger, Legal Entities, and Business Units in Spreadsheets

Represent your enterprise structures in your chart of accounts, ledger, legal entities, and business unit configuration to track and report on financial objectives and meet reporting requirements. These components provide the underlying structure for organizing financial information and reporting.

The chart of accounts within the ledger facilitates:

Aggregating data from different operations, from within an operation, and from different business flows
Consistent definitions to your stakeholders in compliance with legislative and corporate reporting standards and aids in management decisions

Rapid implementation is a way to configure a financial enterprise and financial reporting structures quickly using sheets in a workbook that upload lists of:

Companies (legal entities)
Ledgers by country
Business units
Chart of accounts and segment values
Segment value hierarchies
Financial sequences
Required subledger accounts

Once the sheets have been uploaded, the application creates:

Chart of accounts structure and instance
Segment value hierarchies
Key accounts such as retained earnings
Required subledger accounts
Accounting calendar
Primary ledger for each country represented on the legal entities sheet
Legal entities and their locations
Business units
Document and journal sequencing
Set of Financial Reporting reports
Three account groups

Caution: Once you begin using your chart of accounts, calendar, and ledger, making changes to their fundamental attributes is neither recommended nor supported. This includes your chart of account segments, including the segment labels as well as other characteristics of those segments, and your calendar structure or pattern.

The following figure illustrates the flow of the enterprise structure setup.

Legal entities (companies) incur transactions that are identified by business units with business functions. Transactions that are recorded in subledgers are transferred to the ledger. A ledger is characterized by a calendar, a currency, and a chart of accounts. A chart of accounts consists of segments, some of which are assigned segment labels, such as cost center, natural account, and primary balancing segment. Legal entities can be assigned primary balancing segment values.

This figure shows the flow of the enterprise structure setup from the legal entities to the ledger.

Additional information for some of the common setup objects depicted in the figure follows:

Legal Entity: Identifies a recognized party with rights and responsibilities given by legislation, which has the right to own property and the responsibility to account for itself.
Business Units: Performs one or many business functions that can be rolled up in a management hierarchy. A business unit can process transactions on behalf of many legal entities. Usually a business unit has a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss. When created through the spreadsheet, all available business functions are automatically enabled for the business unit.
Ledger: Maintains records and is a required component in your configuration. The rapid implementation process:
- Creates primary ledgers by combining the chart of accounts, calendar, and currency as well as other required options defined in the rapid implementation workbook.
- Assigns the standard accrual subledger accounting method to the primary ledger. The subledger accounting method is used to group subledger journal entry rule sets together to define a consistent accounting treatment.
- Creates a General Ledger balances cube for each ledger with a unique chart of accounts and calendar combination. Each segment is created as a dimension in the balances cube along with the standard cube dimensions.
Subledger: Captures detailed transactional information, such as supplier invoices, customer payments, and asset acquisitions. Uses subledger accounting to transfer transactional balances to the ledger where they're posted.
Chart of Accounts: Configures accounts that consist of components called segments. Accounts are used to record balances and organize financial information and reporting.
Segment: Identifies one of the components of a chart of accounts, which when combined with other segments, creates an account combination for recording transactions and journal entries. A segment is associated with a value set, which provides the set of values for that segment, along with the formatting and validation for those values.
Segment Label: Identifies certain segments in a chart of accounts and assigns special functionality to those segments.
- Balancing Segment: Ensures that all journals balance for each balancing segment value or combination of multiple balancing segment values for financial processes and reports. The three balancing segment labels are: Primary Balancing Segment, Second Balancing Segment, and Third Balancing Segment.
- Natural Account: Determines the account type (asset, liability, expense, revenue, or equity) and specific categorization of the financial activity. Facilitates General Ledger processes, such as closing of the income statement accounts to retained earnings at the beginning of a new fiscal year.
- Cost Center: Facilitates grouping of natural accounts by functional cost types, accommodating tracking of specific business expenses across natural accounts.

With the rapid implementation workbook you can also:

Create more than one hierarchy for any of your chart of accounts segments during initial setup. You can also create additional hierarchies and hierarchy versions, as well as update existing hierarchy versions, after the initial setup is done by uploading the rapid implementation spreadsheet data.
Create sequences for each legal entity or ledger based on the predefined country defaults. Document sequences are created for: Payables invoices, Payments, Receivables invoices, Receivables credit memos, Receivables adjustment activities. Reporting and accounting journal sequences are created for subledger journals and General Ledger journals.